Practical preparations for the euro: final
countdown for Slovakia

With only 5½ months to go before the adoption
of the euro, Slovakia's preparations are quite advanced but further efforts are
necessary. Slovakia last week received the final and formal approval for
adopting the euro on 1 January 2009 and the conversion rate was set. It must
now concentrate on ensuring that the population and businesses are well prepared
and the changeover takes place smoothly.

"Now that it has obtained the green light for the euro, Slovakia must
concentrate on finalising the preparations to ensure that the changeover to the
euro on the 1st of January is a smooth affair. It must use the
remaining months to make sure that consumers and enterprises are fully ready to
use the euro from day one and that the retail sector undertakes and implements
fair-pricing commitments," said Economic and Monetary Affairs Commissioner
Joaquín Almunia.

The Commission today adopted the seventh regular 'Report on the practical
preparations for the enlargement of the euro area'. The report focuses on
Slovakia, which will adopt the euro on 1 January 2009. The conversion rate has
been set at 30.1260 Slovak crowns to the euro.

The practical preparations have been entrusted to the National Coordination
Committee and the Government Plenipotentiary for the Introduction of the Euro.
The Commission suggests that Slovakia reinforces the coordination structures to
ensure that they work efficiently and are able to solve any problems
diligently.

Preparations of the financial and banking sectors are well advanced. The euro
coins - a total of 500 million pieces has been foreseen - will be minted by the
national Mint at Kremnica, a town in the centre of Slovakia whose minting
traditions go back many centuries. The designs of the national sides that were
selected by a popular vote can be seen at:

The amounts of banknotes ordered by commercial banks so far are relatively
low: only 27% of a total of 188 million estimated to be needed by the NBS,
compared to 92.5% in Malta and an average of 67% for the first group of euro
area countries at a similar point in time. To ensure a smooth introduction of
euro cash, it is absolutely essential that banks and businesses should be
supplied with banknotes and coins before €-day. Businesses themselves
appear to be late in planning for the quantities of cash they will need to be
able to give change in euro from day one and avoid queues at banks. Additional
efforts with a view to increasing the frontloading volumes to banks and
sub-frontloading to businesses should, therefore, be made.

Regarding €-day itself, the banks plan for extra opening hours in the
first days of January 2009, including, in some branches, special counters for
businesses. The NBS and the commercial banks also plan to distribute mainly
small denomination banknotes (€10 and 20) at automated cash points and
over-the-counter to ease the changeover.

In order to get familiar with their new currency, Slovak citizens will have
the possibility to buy mini-kits as of December. A total of 1.2 million such
kits have been ordered, but this may prove insufficient. The experience from the
previous changeovers showed that each household buys approximately one mini-kit.
Slovakia has some 2 million households and a total population of 5.4 million.

The Commission strongly believes businesses should be encouraged to sign the
'Ethical Code' of conduct devised by the Government Plenipotentiary together
with the Association of Slovak Entrepreneurs, undertaking to respect the
conversion rules. This is to address consumers' fears of price increases during
the changeover.

The Slovak Trade Inspection (SOI) will be in charge of controlling that the
rounding rules are respected and prices correctly converted and displayed in
both currencies until end 2009 as planned by the
government[1]. The SOI has the
power to deliver warnings and charge penalties of up to € 60,000 in case
of breaches. It is important that it has sufficient resources to carry out these
tasks. However, administrative price regulation or equivalent market distortive
measures would better be avoided as such practices would only delay the normal
price adjustments arising from the evolution of world markets that would
inevitably occur in one shot at the end of the freezing period.

The euro information campaign has intensified in recent months and is already
wielding results with some 64% of Slovaks saying they feel very, or rather
well, informed about the changeover, according to a Flash Eurobarometer survey
carried out in May, compared to 51% in September 2007. This is important to
ensure the citizens embrace their new currency with full confidence. But
although they are more familiar with the euro and with Economic and Monetary
Union there is still a growing demand for information.

A separate survey that explored the state of preparations among Slovak
enterprises, mostly SMEs, indicates that the majority are rather well informed
and feel they are advanced in the preparations.

The full report and a separate staff working document taking stock of the
preparations in the other EU Member States that have yet to adopt the euro, as
well as the latest Eurobarometer surveys on the public and business opinion, can
be found at:

[1] The period of dual
display of prices ends at the end of 2009, but price controls are expected to
continue well into 2010. The controls will be carried out either by mystery
shoppers (special attention will be paid to small shops and shops in remote
areas) or as a result of customer complaints, which will be collected via 'euro'
phone line, e-mail, fax or personally in the SOI regional offices. The results
will be published locally every two weeks.